It’s been 12 years since the last value cycle ended – is it time for a shift?

Rob Arnott, founder of Research Affiliates, talked with Christine Benz and Jeffrey Ptak on Morningstar’s, The Long View.

They discussed the cycles of value and growth through history, similarities between the market now and the peak of the tech bubble in 2000, and the rise of multifactor strategies.

Arnott recounted the situation in the late 90’s when many of the high-tech names were significantly overvalued and things were poised for a correction. He shared observations and market insights he believes signify a change ahead.

In 2000 the tech bubble occurred when more than half of the top market-cap stocks were tech stocks. Heading into 2019, seven of the eight largest market-cap companies were tech-based.

They discussed the disruptive companies of today are wiping out entire industries. Amazon has been a major disruptor to providers of consumer goods, and companies like Google and Facebook have completely changed how the advertising industry works. As history has shown, disruptors get disrupted-Palm, Blackberry, Betamax, etc. What’s in store for the current disruptors?

Investments in multifactor strategies are on the rise. Investors are seeing the value in the diversification of exposures, believing it can help soften the effect of drawdowns while increasing the potential for outperformance.

You can learn more about Arnott’s insights by listening to the full podcast.